"Spain should mitigate the regulatory complexity to attract international banks"
Ricardo Gómez Barredo, Director of Accounting & Supervisors at BBVA, indicated that “the first country that manages to balance the power of the bank regulators will be the most attractive to potential investors,” at the workshop “Madrid the financial center” last Friday. In the context of Brexit, the Spanish financial system should make the regulatory framework less complex in order to become an attractive destination for international banks.
At this meeting organized by the University of Navarra and Cuatrecasas, Ricardo Gómez Barredo participated in a round table discussion on the keys to making Madrid the place international financial groups choose to establish their headquarters in the context of Brexit. Mª Ángeles Peláez, Director of Group Financial Accounting at BBVA also participated in the event, in a panel discussion of IFRS 9, one of the additions to the Spain’s General Accounting Plan on financial instruments.
To start his presentation, Ricardo Gómez Barredo, the Director of Accounting and Supervisors at BBVA indicated that although Madrid has several advantages, it also has some pending tasks to make it an attractive destination. “Spain should mitigate the regulatory complexity to attract international banks”, he said, in addition to increasing legal security (an area in which it is weaker than other European centers).
He specifically focused on the overregulation of the sector and the corresponding complexity as barriers that new players will analyze when deciding their location. In this regard, he feels that the Spanish financial system should adapt to best practice regarding the balance of power among regulators.
In his presentation, Ricardo Gómez Barredo reviewed the four factors he considers pivotal to making Spain an attractive option for potential investors. They are: legal security: balance of power among accounting regulators, corporate governance model and the digital environment.
Ricardo Gómez Barredo defined legal security as a critical factor for economic development and attracting investors. The foundation for democratic systems is the separation of powers. If it is diluted it can affect the country’s stability and it will no longer be an attractive option for international banks, he explained.
In terms of accounting, Ricardo Gómez Barredo referred to the complexity of the current accounting framework in Spain in comparison to that of other developed countries. In his opinion, a foreign bank that decided to set up an office in Spain work face a complex situation to adapt to the accounting regulations and reporting. He therefore stressed the need to mitigate the complexity of the regulatory framework and adopt best practice for balance of powers among regulators in order to overcome potential barriers to foreign investors.
Another key element to boost confidence and increase the competitiveness of the Spanish economy involves ensuring that financial institutions have a rigorous corporate governance model, in his opinion. For BBVA’s Director of Accounting and Supervisors it is essential that banks operate in a secure, solid manner, with integrity and in compliance with current legislation.
To conclude, the Director of Accounting & Supervisors analyzed the new digital context in which the financial industry has to operate. This is a highly challenging environment – not only becomes it relates to the transformation of the industry, but also because it requires the sector to react quickly. Financial institutes have to face a complex environment - changes in consumer expectations, the impact of new technologies and new players joining the value chain. Given all of this, he was convinced that the jurisdiction that leads the initiative to facilitate the conditions in which financial institutions operate will be the one they choose as a headquarters.
In this regard, Ricardo Gómez Barredo emphasized that supervisors and regulators need to react to this new reality. Concerning technology, he indicated that: “We are in a position to make Spanish regulations a global benchmark.” And in terms of the arrival of new players, he added that: “We need to forget about the idea of limiting fintech firms’ work capacity – they are free institutions – but we need to create conditions so that financial institutions operate in the same conditions.”
Ricardo Gómez Barredo ended his presentation by saying that “a clear and just framework will contribute to financial stability, innovation, consumer protection and efficiency gains in the market.”